Sec. 303. Education Affordability Trust Fund
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Part G of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1088 et seq. ) is further amended by adding at the end the following: There is established within the Department a trust fund to be known as the Education Affordability Trust Fund (referred to in this section as the Trust Fund ). The head of the Trust Fund shall be a 6-member Education Affordability Trust Fund Board (referred to in this section as the Board ). The members of the Board shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who— have experience and expertise in the management of financial investments; have at least 10 years of experience in the financial investment field; at least 3 of which have experience working with rural lenders, historically disenfranchised groups, or low-income communities; and are not currently an elected official.
No individual required to register as a lobbyist under section 4 of the Lobbying Disclosure Act of 1995 ( 2 U.S.C. 1603 ) may be appointed to, or serve on, the Board. No member of the Board may hold or may have held the position of Member of the House of Representatives or Senator, may hold the position of officer or employee of the House of Representatives, Senate, or instrumentality or other entity of the legislative branch, or may have held such a position within 4 years of the date of appointment.
The members of the Board shall serve 6-year terms, staggered such that the terms of 2 members ends every 2 years. The 2 members serving terms that end at the same time may not be members of the same political party. With respect to the 2 individuals appointed to fill terms ending at the same time, neither individual may begin serving as a member of the Board until both have been appointed and confirmed by the Senate. Upon the expiration of a term of a member of the Board, that member shall continue to serve until a successor is appointed.
An individual may only serve as a member of the Board for a maximum of 2 terms. The President may remove a member of the Board only for inefficiency, neglect of duty, or malfeasance in office. The initial members of the Board shall be appointed no later than 90 days after the date of enactment of this section. Each member of the Board shall serve as the Chair of the Board during the final year of the term for which the member is appointed. Each member of the Board shall, with respect to entities in which the Trust Fund invests, either divest any interest in such entities or place such interests into a blind trust.
The Board shall meet no less than once per quarter. The fund manager appointed under subsection
(c)shall attend not less than 2 meetings of the Board each year, to discuss forecasting and current investment performance. If, once the assets under management of the Trust Fund have reached $500,000,000,000, the assets under management of the Trust Fund drops below $300,000,000,000, the Board shall immediately hold an emergency meeting to discuss ensuring the long-term solvency of the Trust Fund. Investment guidelines shall be adopted by a unanimous vote of the entire Board. All other decisions of the Board shall be decided by a majority vote. All decisions of the Board shall be entered upon the records of the Board. While serving on the business of the Board (including travel time), a member of the Board shall be entitled to compensation at the per diem equivalent of the rate provided for level IV of the Executive Schedule under section 5315 of title 5, United States Code, and while so serving away from home and the member’s regular place of business, a member may be allowed travel expenses, as authorized by the Chair of the Board. The Board shall appoint independent fund managers from among individuals who have met such ethics vetting requirements as the Board may establish. If the Board fails to make an appointment under subparagraph (A), the Chair shall, not later 10 days after the date of such failure, make the appointment. The Board shall make the initial appointment of independent fund managers under subparagraph
(A)not later than 60 days after the date on which all members of the Board are first appointed. The Board shall— retain independent advisers to assist it in the formulation and adoption of its investment guidelines; pay the administrative expenses of the Trust Fund from the assets in the Trust Fund; and discharge their duties (including the voting of proxies) with respect to the assets of the Trust Fund solely in the interest of the Trust Fund and through it, the participants and beneficiaries of the programs funded under this Act— for the exclusive purpose of— providing zero-interest Federal student loans to existing and future borrowers; and defraying reasonable expenses of administering the functions of the Trust Fund; with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; by diversifying investments so as to minimize the risk of large losses and to avoid disproportionate influence over a particular industry or firm, unless under the circumstances it is clearly prudent not to do so; and in accordance with Trust Fund governing documents and instruments insofar as such documents and instruments are consistent with this Act. No member of the Board shall— deal with the assets of the Trust Fund in the member’s own interest or for the member’s own account; in an individual or in any other capacity act in any transaction involving the assets of the Trust Fund on behalf of a party (or represent a party) whose interests are adverse to the interests of the Trust Fund or the interests of borrowers; or receive any consideration for the member’s own personal account from any party dealing with the assets of the Trust Fund. The Board shall annually engage an independent qualified public accountant to audit the financial statements of the Trust Fund. The Board shall submit an annual management report to the Secretary of Education, the Secretary of the Treasury, the President, and the Congress not later than 180 days after the end of each fiscal year, including— a statement of financial position, including the total amount in the Trust Fund; a statement of operations; a statement of cash flows; a breakdown of the investments made by the Trust Fund, including by type; a statement on internal accounting and administrative control systems; the report resulting from an audit of the financial statements of the Trust Fund conducted under subparagraph (A); and any other comments and information necessary to inform the Congress about the operations and financial condition of the Trust Fund. The Board shall make each report required under this subparagraph available to the public, including on the website of the Department of Education. The Board shall have the authority to make rules to govern the operations of the Trust Fund, employ professional staff, and contract with outside advisers to provide legal, accounting, investment advisory, or other services necessary for the proper administration of this section. In the case of contracts with investment advisory services, compensation for such services may be on a fixed contract fee basis or on such other terms and conditions as are customary for such services. Each Member and employee of the Board shall file with the Secretary of Education and appropriate committees of Congress financial disclosure reports that comply with the requirements under subchapter I of chapter 131 of title 5, United States Code. The expenses of the Trust Fund and the Board incurred under this section shall be paid from the Trust Fund. The fund managers shall invest the assets of the Trust Fund in a manner consistent with the investment guidelines adopted by the Board. The fund managers shall invest the amounts in the Trust Fund in bonds that consist of the following: Municipal bonds. Bonds issued by the Department of the Treasury, which may not make up more than 40 percent of the total investments of the Trust Fund. Other Federal bonds. Bonds issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or a Federal Home Loan Bank. International bonds, which may not make up more than 10 percent of the total investments of the Trust Fund. Corporate bonds, which may not make up more than 10 percent of the total investments of the Trust Fund. The investments of the Trust Fund shall consist— only of investments rated at least Baa1 or BBB+ by Moody’s, S&P, or Fitch Ratings; at least 80 percent of investments rated at least A3 or A- by Moody’s, S&P, or Fitch Ratings; at least 60 percent of investments rated at least Aa1 or AA+ by Moody’s, S&P, or Fitch Ratings; and at least 40 percent of investments rated at least Aaa or AAA by Moody’s, S&P, or Fitch Ratings. The investments of the Trust Fund shall be diversified to minimize the risk of large losses and to avoid disproportionate influence over a particular region, industry, or firm, unless under the circumstances it is clearly prudent not to do so. The Trust Fund may not invest in entities or subsidiaries of entities that are— based in any country that does not have diplomatic relations with the United States; based in any country, the government of which is subject to sanctions by the United States; or on a sanctions list of the Department of the Treasury. During the 10-year period beginning on the date of enactment of this section, the fund managers shall prioritize investments in bonds with a maturity date of less than 10 years. For purposes of the Congressional Budget Act of 1974 ( 2 U.S.C. 621 et seq. ), the Balanced Budget and Emergency Deficit Control Act of 1985 ( 2 U.S.C. 900 et seq. ), and chapter 11 of title 31, United States Code, and notwithstanding section 20 of Office of Management and Budget Circular No. A–11, or any successor thereto, earnings of the Trust Fund shall be calculated on an accrual basis. .
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